I don't know if you have ever gone through the experience of building a new home for yourself, if you have, you understand
what I mean by saying that it is a real pain. If you attempt to build a new home far away from where you
live, the problems can only exponentially increase. Inevitably there are going to be problems and inevitably the house will not
be built the way you picture it in every detail. I am a big believer in purchasing something that you can see
and touch, then you know exactly what you are buying. However, once you have negotiated to purchase an existing product, you should spend a few dollars to have an independent
contractor or real estate inspector go over the house thoroughly and give you a report on its condition. When you negotiate to purchase a
home, you should put into the contract that you have an inspection period in which you have the right to back out of the deal if
the home does not meet with your approval. Then contact the local building association and ask for a referral of a contractor
who would come in and do the inspection. Get the report in writing. Insist that the report not only tell you what items are in
need of repair, but the expected life of all items.
The builder or developer may tell you that this is really unnecessary since you are purchasing a new home from him and
there is a one year warranty.
However, be careful because often that warranty starts when the home was originally completed
and it may have been sitting for a while before you purchased it. Therefore, the warranty may have expired by the time you
actually close on it or it may expire soon thereafter.
Know that the warranty more often than not is a collection of warranties. Maybe the developer would stand behind a leak in
the roof for a year from the time you purchase the home regardless of when the home was originally completed, but how
about the warranty on the appliances, refrigerator, stove, washer/dryer, intercom and security system? Those are warranties that
are not coming from the developer to you but from the manufacturer of those items and they take effect usually upon the
completion of the building or the installation of the appliances in the building.
In the event you are going to have your property built to your specifications my best advice to you is, whatever is supposed to
be in the home should be stated in the contract in writing. You should also, (and it should state this in the contract, as well) have
a complete set of plans signed off and approved by you before construction commences.
In addition, it is not a bad idea to bring that complete set of plans to an architect who, for a fee, will go over them and give
you any comments about things that you may want. He can point out things that are obviously needed and are not present, such as
sufficient insulation, or heating or cooling ductwork, for ex-
ample.
Once the home you have ordered is complete, then find yourself an independent party to inspect the property before you
close on it.
Usually a builder or developer becomes immediately nervous after building an existing product. He is
always concerned how long he will have to pay for maintenance until somebody purchases it from him.
One of the downsides to buying existing property is that the developer wants you to close on it immediately. You can often
get the developer to delay the close longer than he is stating he is willing to wait. In this negotiation, figure that it is costing the
developer about one percent per month of his cost of building the home. Remember, that is the cost of building the home, not the
cost of carrying the land.
So, if you figure building costs (and for this purpose I will use a general rule of thumb of approximately $35.00 per air
conditioned square foot) you will have an idea of what the cost to him carrying the house is. For instance, a two thousand square foot
house might have cost him $75,000.00 to build and is costing him $750.00 for each month that he has to wait for you to actually
close on it.
If you get him to walt an additional two or three months, then you have in essence gotten him to reduce the price
of the home an additional $1,500.00 to $2,250.00. Of course, that is with the assumption that there is another buyer ready,
willing, and able to purchase the home and close immediately which, if that was the case, you would not have the ability to
negotiate on this house in the first place.